Consultex, Inc. was founded in 2012 as a small financial consulting business. Th
ID: 2560795 • Letter: C
Question
Consultex, Inc. was founded in 2012 as a small financial consulting business. The company had done reasonably well in 2012–2014 but started noticing its cash dwindle early in 2015. In January 2015, Consultex had paid $11,500 to purchase land and repaid $4,000 principal on an existing promissory note. In March, the company paid $1,100 cash for dividends and $1,100 to repurchase Consultex stock that had previously been issued for $1,100. To improve its cash position, Consultex borrowed $4,100 by signing a new promissory note in May and also issued stock to a new private investor for $11,100 cash. Year-end comparative balance sheets and income statements are presented below.
Prepare a properly formatted Statement of Cash Flows for Consultex, Inc. for the year ended October 31, 2015 (using the indirect method). (Amounts to be deducted should be indicated with a minus sign.)
Consultex, Inc. was founded in 2012 as a small financial consulting business. The company had done reasonably well in 2012–2014 but started noticing its cash dwindle early in 2015. In January 2015, Consultex had paid $11,500 to purchase land and repaid $4,000 principal on an existing promissory note. In March, the company paid $1,100 cash for dividends and $1,100 to repurchase Consultex stock that had previously been issued for $1,100. To improve its cash position, Consultex borrowed $4,100 by signing a new promissory note in May and also issued stock to a new private investor for $11,100 cash. Year-end comparative balance sheets and income statements are presented below.
CONSULTEX, INC. Balance Sheet October 31 2015 2014 Assets Cash $ 9,450 $ 11,300 Accounts Receivable 12,200 11,100 Prepaid Rent 1,550 2,100 Land 22,500 11,000 Total Assets $ 45,700 $ 35,500 Liabilities and Stockholders’ Equity Salaries and Wages Payable $ 1,550 $ 2,100 Income Taxes Payable 1,100 1,100 Notes Payable (long-term) 11,200 11,100 Common Stock 18,100 8,100 Retained Earnings 13,750 13,100 Total Liabilities and Stockholders’ Equity $ 45,700 $ 35,500 CONSULTEX, INC. Income Statement For the Year Ended October 31 2015 2014 Sales Revenue $ 153,500 $ 156,500 Salaries and Wages Expense 97,100 96,100 Rent Expense 35,100 29,100 Utilities Expenses 18,800 19,100 Income before Income Tax Expense 2,500 12,200 Income Tax Expense 750 3,660 Net Income $ 1,750 $ 8,540 Required:Prepare a properly formatted Statement of Cash Flows for Consultex, Inc. for the year ended October 31, 2015 (using the indirect method). (Amounts to be deducted should be indicated with a minus sign.)
Explanation / Answer
Statement of cash flows Cash flow from operating activities Net income for the year 1,750 changes in current assets and current liabilities increase in accounts receivable -1100 Decrease in prepaid rent 550 Decrease in salaries and wages payable -550 -1100 Cash flow from operating activities 650 Cash flow from investing activities cash paid for purchase of land -11,500 Cash used for investing activities -11,500 Cash flow from financing activities cash paid for repaying note -4,000 Cash dividend -1,100 treasury stock -1,100 cash from stock issue 11,100 cash from new notes 4,100 Cash from financing activities 9,000 net decrease in cash -1,850 cash at beginning 11,300 cash at year end 9,450
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.